Kiosks Impact Hastings Movie Rentals17 Aug, 2009 By: Erik Gruenwedel
The rise of $1-per-day movie rental kiosks has prompted Hastings Entertainment to reduce its in–store rental price to 99 cents on thousands of titles, including new releases.
The Amarillo, Texas-based retailer with 151 stores throughout the Southwest, said a dearth of new releases coupled with the influx of kiosks, spearheaded by Redbox, have devalued the movie rental to commodity-based pricing.
“This has lowered our rental revenue in the short-term; however, we are seeing a significant increase in units rented along with growth in new customer membership sign-ups,” said Hastings chairman and CEO John Marmaduke in a statement.
Indeed, movie rental revenue in the second quarter (ended July 31) declined $1.9 million (9.1%) to $19.8 million, compared to $21.8 million during the prior-year period.
Same-store rental comps decreased 10.1% in the quarter due to fewer rentals of DVDs and increased promotions. The decline was partially offset by increased rentals of Blu-ray Disc movies and video games.
In addition, promotional coupons decreased rental comps 2.1%. DVD rentals were lower due to fewer titles released with gross box office revenue in the range of $20 million to $80 million, which typically represent the strongest rentals, the company reported.
Rental video game comps increased 6.9% for the quarter.
Movie sales comps decreased 8.1% due to lower sales of new and used DVDs and lower sales of DVD boxed sets, partially offset by increased sales of Blu-ray Discs.
Total video game revenue fell nearly 21% due to lower sales of video game consoles and lower sales of older generation video games, partially offset by increased sales of used video games for the Nintendo Wii, Xbox 360 and Sony PlayStation 3 systems.
Hastings’ revenue for the quarter topped $117 million, down 6.2% from $125 million last year. The company posted a $400,000 loss compared to income of $700,000 last year.
“Customer purchase behavior has shifted toward value priced merchandise,” Marmaduke said. “We have been very active in partnering with our key vendors to bring exceptional values while maintaining or improving our merchandise margin rates.”